IRELAND - Trustees of the SR Technics pension fund have been told the scheme is not eligible for help from the new rescue fund for pensions known as the Pensions Insolvency Payment Scheme (PIPS) as the government cannot extend the categories of insolvency to still solvent employers.

The aviation firm closed its Irish business in Dublin in February and in April the trustees agreed to begin the wind-up process of the SR Technics Ireland Limited Scheme which was €26m in deficit.

SR Technics claimed it could not afford to make good the shortfall on its defined benefit pension scheme so the Services, Industrial, Professional and Technical Union (SIPTU) referred the matter to the Labour Court. It in turn recommended "the benefits of both the SR Technics Defined Benefit Scheme and the Irish Airlines' Superannuation Scheme should be fully funded by the company". (See earlier IPE article: Labour Court tells SR Technics to fund deficit)

But Pat Ward, branch organiser at SIPTU, said the company is still refusing to fund the deficit and "the impact is those that retired in this round are on 50% less of a pension than they are entitled to".

The trustees of the scheme and SIPTU have now called on the government to amend the new PIPS arrangement, announced in April by Mary Hanafin, the minister for social and family affairs, to "address the problems being faced by people who have seen their employer become insolvent and their pensions reduced", so that schemes such as SR Technics could be included.

The provision in the Social Welfare and Pensions Act 2009 requires schemes to have an insolvent employer in order to be eligible for the PIPS. SIPTU, however, has argued the pension fund meets all the eligibility requirements except that technically SR Technics is solvent, while the Irish arm cannot afford to fund the deficit.

In a letter sent to the chairman of the trustees on behalf of Hanafin, the pension fund was told the type of situation deemed to fall within the scope of insolvency is specified by the Protection of Employees (Employers' Insolvency) Act 1984, and that SR Technics "does not fall within this definition".

The letter added: "The regulation making power of the minister cannot go beyond the governing legislation, and could therefore not be used to expand categories of insolvency for purposes outside that of the 1984 act itself."

It noted the PIPS legislation is targeted at pension funds in deficit with insolvent employers and not for schemes such as SR Technics "which opt to wind-up without an employer being solvent".

Instead, it suggested the change to wind-up priorities included in the 2009 Act may benefit current and deferred members by ensuring a "more equitable distribution of the assets of the scheme".

Ward said: "We're just trying to pursue some greater protection for workers. But they're simply not going to amend the legislation. Our concern now is what is to stop any employer relinquishing their pension responsibility, as there is no protection except where unions can use industrial action."

He argued it now "boils down to the political will to put in place safeguards to ensure employers cannot wash their hands of the pension scheme" as it will require a change in legislation potentially including an increase of powers for the Pensions Board to mirror the UK Pensions Regulator (TPR). (See earlier IPE article: Irish gov't urged to extend Pension Board powers)

Ward said: "When we met the EU Commissioner in April we highlighted the inequality on the island of Ireland, as if it had been in Northern Ireland TPR could have done something to prevent it. (See earlier IPE article: EC to raise insolvency issue with Irish gov't)

"The only meaningful solution is the introduction of legislation to combat any employer whom in a state of solvency walks away and absconds themselves form discharging their responsibilities to making good a deficit within the pension scheme," he added.
 
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